Blockchain technology is like having a neutral party (like a notary) present during each transaction, ensuring that data transmitted is verified at all times. If someone were to try to alter any data, they would need to access each block at the exact same time, making it virtually impossible to make unauthorized changes.
Perhaps the most important area of development is process capabilities. Blockchain offers the potential to verify goods going through the supply chain, making it an exciting development for the industry. In fact, blockchain can help with transparency, auditing transactions and even reducing costs.
Effects of Blockchain on the Supply Chain
Although the most widely known application of blockchain technology is Bitcoin, its use has numerous applications in the manufacturing sector. Since it can help securely and transparently track transactions, blockchain can document each stage of the supply chain, from manufacturing goods to delivery and even payment history. Because of its accuracy, blockchain could make companies much more efficient, reducing human errors that disrupt transactions within the organization. Its codified rules may even eliminate the need for audits and reviews of internal processes and systems.
In fact, BHP Billiton uses blockchain to track and record data throughout the mining process. Specifically, they record movements of wellbore rock and fluid samples and plans on communicating with vendors to secure real-time data during sample collection and delivery.
De Beers is also utilizing blockchain when it announced earlier this year that it will create a blockchain ledger to trace stones from when they are mined all the way to when they’re sold to consumers. This will reassure consumers as to which stones are certified child-labor or conflict-free.
While still in its early stages, it’s obvious that blockchain is set to revolutionize the manufacturing sector.
Improving Daily Tasks
Think about it: a blockchain supply chain can help to record information such as dates, location, price and quality. Making this information readily available helps to increase traceability and improve visibility over compliance in areas such as outsourcing contract manufacturing. It could even strengthen a company’s role as a leader in responsible manufacturing.
Here are more tasks that blockchain could help improve:
- Sharing assembly, manufacturing process and maintenance of products with vendors and suppliers
- Linking barcodes or digital tags to physical goods
- Tracking and changing purchasing orders or other trade-related documents
- Recording transfer of assets such as containers, pallets and trailers
- Verifying or assigning certifications (e.g. fair trade)
If you pair this technology with IoT-connected devices, machines can essentially affect the supply chain by completing tasks such as ordering replacement parts, helping to minimize asset downtime. In other words, blockchain has the potential to increase innovation within companies because there is no limit to what specialized uses it can have. It could even provide opportunities for greater scalability since anyone can access blockchain records from numerous touchpoints.
As blockchain technology reaches the masses, corporations large and small will experiment with innovations to fulfill a wide range of needs. So far, the issues that blockchain can solve seem to be working. If companies continue to explore its potential to increase efficiency, transparency, and overall supply chain management, who knows what kind of innovation will be available in the future.
Meet the Author
Rodd Booth, CPA
Aldrich CPAs + Advisors
Rodd has over ten years working closely with medium-sized privately held companies as well as SEC registrants. His primary focus has been serving clients within the manufacturing, distribution, professional services and retail sectors. His experience with financial statement assurance, business consulting, internal controls reviews and financial due diligence has helped companies strengthen their financial reporting…
- Manufacturing and distribution
- Professional services
- Audit and assurance services
- Business consulting
- Internal controls reviews
- Financial due diligence
- Certified Public Accountant